BANKRUPT: Why Banking is Broken. How it can be Transformed.

Americans (and much of the rest of the world) are angry and fed up with banks.

In this explosive book, Carol Realini reveals what afflicts today’s biggest banks and how they can transform using disruptive innovation to reconnect with their customers.

Overview

Today’s vast superbanks are organizations that seem to operate by their own rules and trample their Main Street customers. BANKRUPT shows what afflicts today’s biggest banks, and shows how they nickel-and-dime the average customer even as they hold trillions of dollars in assets and government bailout funds.

It’s not about creating nostalgia for a golden age that is long past.

It’s about how today’s banks can transform themselves to redefine banking. It’s a call for leadership that lives by the motto “Do the right thing.”

To chart a path to the future, Carol draws upon her extensive personal experience in India, and reveals the amazing revolution in grassroots banking that is taking place right now. BANKRUPT is an optimistic book. It uses the crisis we are experiencing as a way to look forward to a very different kind of future for banking – one that will benefit both the banks and their millions of customers.

BANKRUPT: Why Banking is Broken. How it can be Transformed.Published April 2012ISBN 978-1-907720-52-9178 pages

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The world has changed in many ways, but people still need their local bank to be there to help keep their money safe, save for education, build a future for their families, support their communities, and provide services to small businesses. Yet many people believe that banks have lost their way.

Banks have an excess of computers, branches, websites, mobile apps, and ATMs. They offer a dizzying array of services. But in the process they have lost something precious: their compassion and dedication to their customers.

With advertisements that saturate the airwaves, they compete for our business – but when we give them our business, the relationship suddenly becomes adversarial. As prospects we are wooed; as customers we are suspect. We become enemies who must be charged fees for every imagined transgression.

The bank hides behind pages of fine print. They sell credit cards that charge breathtaking interest rates. They advertise that they are friendly and community-spirited, yet the average person cannot get a mortgage and the small businessperson cannot get a loan.

The nation’s banks are sitting on trillions of dollars in assets and yet they nickel-and-dime the average customer who has a thousand dollars on deposit. It seems that during the recent Great Recession they figured out how to save themselves, and then how to adapt their business model to increase market share with the richest one percent.

Is it our imagination? Are we, the customers, to blame? Are we ungrateful? Are we demanding services without expecting to pay for them? Fifty years ago, there were no ATMs. If you wanted to withdraw some money out of your bank account for a weekend activity, you had to go to the bank before the doors closed at three o’clock on Friday afternoon. If you couldn’t get there in time, you couldn’t get your cash until Monday morning.The only fee you ever paid was a few bucks for a new box of checks. Banking didn’t cost much, but they didn’t offer many special services, either.

Over the past fifty years, banking and the banking industry have changed. Thanks in part to aggressive marketing by big banks, we take for granted many services that did not exist years ago.

This book is not about creating nostalgia for some imagined golden age that is long past. Change is a necessary part of life. But consumers have a right to expect and demand transparency, fairness, and real competition in the banking industry. They have a right to expect that advances in technology that benefit the banks will also benefit the consumer.

This book examines two key areas of concern. The first is the crisis the banks are facing, and how deep the hole is. This includes what makes it so difficult for the banks to evolve in a positive direction as conditions change, and how the business model that worked fifty years ago may have created many of the problems they must tackle to move forward.

The other is about the disruption that is on the horizon. Two forces are converging to change banking forever. First is the customer demand for good service at an affordable price. Second are technological changes that are reshaping our lives and businesses. Banks will either step up to participate in this disruption – or will fade into the background. For banks to participate they will need to change everything; their culture, their products, their business models, and their services will all need to change. This is not about incremental change; it is about disruption.

Bankers need to reconnect with their community. They need to change their focus from expensive business trips, protecting traditional revenue sources, maintaining legacy systems. The new focus must be on the customer.

Starting with the home equity crisis of late 2007, the Great Recession has been a long and painful period of high unemployment, loss of middle class wealth, and surging poverty. It may be a challenging market environment for the banking industry, but it is even harder on the people who most need their services. The big banks have especially lost their commitment to serving everyday people by providing affordable banking services that empower people’s life and work. In the US the number of American who are opting out of traditional banking is on the increase to new heights; 106 million Americans are cash preferred.

The change that must come will not only benefit millions of households in the United States; it will also impact our competitiveness globally. Innovation in banking will help us be more competitive as we operate in a growing global economy.

As a society, we increasingly bank with a handful of large banks that don’t care about our individual needs. They care about their compensation packages, their careers, and themselves, but they don’t care about their customers. It is a crisis.

To the companies, we say change the boards and change the management teams. Bring on bank leadership that cares about regular people and cares enough to require that their organizations figure out how to give the customers more while charging them less. What is needed are organizations that are leveraging new technologies and redefining products to bring more value to their customers.

This is an optimistic book. It sees the crisis we are experiencing as a way to look forward to a very different kind of future for banking. The middle class needs to recapture banking. We are everyday customers. We can empathize with our neighbors who watch their daily expenses while dreaming of a better future for their children. We are the small business owners or new business creators who start with sweat equity and hard work. And some of us are even the employees of banks.

“Uniquely Carol grasps the conflict between today’s obsolete banking models and the public good. She exposes the dysfunctional environment the banker/politician/regulator trio has created and suggest how a union of accelerating technology and common sense unburdened by outdated banking methods can be used to build financial services for all.” H. David Johnson, Startup Advisor and former PayPal CFO

“The gap between the behavior of the financial services industry at large compared with behavior of consumers has never been growing more rapidly. When paired with an increasingly tough regulatory environment, and the fallout from the global financial crisis, the financial services sector writ large is ready for a massive disruption. Carol’s thoughts are an essential part of the discussion the industry needs to have as a matter of urgency.” Brett King, Founder & Chairman, Movenbank

"BANKRUPT is a wake-up call not only to America's bankers but to the nation at large. How could America have so many consumers 'underserved' today by our traditional financial institutions? What will it take to ensure all Americans have access to low-cost products to help them manage their money? BANKRUPT provides fresh insights and ideas for a path toward needed product and service innovation, new business models, and leaders who welcome the transformation required to serve our nation as it deserves to be served." Jane Thompson, former President, Walmart Financial Services, and American Banker's Innovator of the Year 2011

“Carol Realini is a tenacious visionary and brilliant writer. She has not only written a revolutionary book but launched an entire movement to reverse the appalling lack of integrity, innovative practices and heart in the banking industry. Her proven entrepreneurial success and cleverness will surely catalyze the deep and desperately needed transformation in the world today. This book is a must read!” Jacqueline Miller, CEO, Partnerships For Change

“Carol’s thoughts on the banking industry are from her solid experience in developed, developing and emerging markets where the real and radical financial sector transformation is happening. Combining her acumen for innovation with her passion for reforms in the sector, Carol is able to establish that indeed the industry can still have meaningful impact on the new ‘drivers of the global economy’-the ‘financially excluded’.”Jojo Malolos, President and CEO, Smart Hub, Inc.

“Carol’s curiosity about the world, both how it works and, more importantly, what we can do to improve it, is infectious. Her thoughtful approach to the lack of affordable banking services and harnessing mobile technology to provide a solution to millions of people has distinguish her as a leader and a visionary.” Howard B. Gefen, Director, WW Mobile Business Dev, Amazon.com

“Carol Realini is an inspiration to women entrepreneurs around the world. Her pioneering work in mobile payments laid the rails for a host of other work, not just in the US but also around the world. I greatly value Carol’s ability to get straight to the heart of the problem, influence thinking and guide action.” Charmaine Oak, Practice Lead, Digital Money at Shift Thought

Carol Realini is a successful CEO, entrepreneur and board member with technology and financial services industry experience. She is a globally recognized technology innovator and has successfully led companies through initial public offerings, as well as into acquisitions. She is driven by a passion to improve people’s lives through technology.

Carol has extensive experience in financial services (mobile, payments) and technology (mobile, smart phone applications, payments and banking, enterprise software, distributed computing) and has worked extensively in India and Africa on mobile money. Her latest venture, Obopay, which she founded and served as CEO for 5 years and Executive Chair for one year, is a leading global mobile banking and payment provider.

Carol’s long history of entrepreneurship includes Obopay, Chordiant (IPO), J. Frank Consulting (Acquired), and Legato (IPO). In addition, she has served on several boards of directors, including the NGOs Search for Common Ground and GlobalGiving, and corporate boards Obopay, Chordiant and Invio. Carol also mentors young entrepreneurs in Silicon Valley, providing wisdom and lessons learned from her four successful startup experiences.

A recognized international expert in mobile money, Carol has presented to world business and political leaders at events including those hosted by the U.S. State Department, the World Economic Forum, and the Gates Foundation. In 2008, Carol was named one of the 50 Top Women in Technology by Corporate Board Member magazine, and in 2010, was recognized as one of the most influential women in Silicon Valley by the Silicon Valley Business Journal.